Nexen deal ‘could be extended’
OTTAWA — The clock is ticking on the deadline for a federal decision on CNOOC’s takeover of Nexen and a new set of foreign investment rules, with provinces, corporate Canada and opposition parties demanding a review process that both includes more clarity but presents an attractive business climate.
Federal Industry Minister Christian Paradis mused Wednesday the government’s Dec. 10 deadline for a decision on China National Offshore Oil Corp.’s (CNOOC) $15.1-billion proposed takeover of Calgary-based petroleum producer Nexen “could be extended.”
The Conservative government has already twice extended its review of the transaction and can seek additional time with CNOOC’s permission.
Prime Minister Stephen Harper has promised to announce his government’s updated rules governing foreign investment and takeovers around the same time as its decision on CNOOC’s takeover bid for Nexen. Any delay in announcing a decision on the transaction would likely also delay the release of a new foreign investment framework.
“THIS IS THE DEADLINE. IT COULD BE EXTENDED, BUT ONCE AGAIN, I WON’T SPECULATE,”
CHRISTIAN PARADIS
Alberta Intergovernmental Relations Minister Cal Dallas said Wednesday the province hopes the CNOOC deal is approved because the provinces needs substantial foreign investment in the coming years to help develop its petroleum riches, including the cost-intensive oilsands.
However, Alberta is also hoping the federal government will provide greater clarity on its foreign investment review process and how Ottawa decides on whether a takeover is considered of “net benefit” to Canada, he said.
“The clarity is the key to this. We recognize that even in Alberta there’s a certain number of Albertans that are concerned, that have some angst,” Dallas said.
“Clarity will go a long ways to addressing and having a conversation around the issues that are important and real.”
The Alberta government provided Ottawa a list of conditions it wanted attached to any federal approval of the CNOOC-Nexen transaction. Those conditions reportedly included guarantees that at least half of Nexen’s board and management positions would be held by Canadians; for CNOOC to maintain current staffing levels for at least five years; and a commitment to maintain planned capital spending.
The Harper government is also expected to announce a decision shortly on a proposal from Malaysian national energy company Petronas to acquire Calgary-based natural gas producer Progress Energy Resources.
The government initially blocked the $6-billion takeover in October because the acquisition didn’t meet the “net benefit” test under the Investment Canada Act, although Petronas tweaked its proposal in hopes of receiving federal approval.
With decisions on the takeovers and foreign investment rules looming, Paradis hinted Wednesday another extension is possible beyond the Dec. 10 deadline.
“This is the deadline. It could be extended, but once again, I won’t speculate,” Paradis told reporters.
“The idea here is I don’t want to send any signals. When the decisions are ready to announce, when they are made, when they are ready to announce, this will be done. But no speculation. Don’t interpret nothing from what I’m saying here.”
The takeover bid has sparked intense debate within the Conservative government about how much foreign investment Canada should allow when it comes to strategic natural resources such as oil and gas.